An Autumn Statement for Innovation

Today confirmed that the economy is recovering. Growth forecasts have been upgraded to 1.4% in 2013 and 2.4% in 2014. Unemployment is predicted to fall from 7% in 2015 to 5.6% in 2018.

I welcome the many measures the Chancellor announced in the Autumn Statement this morning: reducing business rates, freezing fuel duty until 2015, freezing rail fares, recognising marriage in the tax system, taking £50 off energy bills and clamping down on tax avoidance.

Labour left us with the biggest budget deficit in our peacetime history, at £157.1 billion, a staggering 11% of GDP while unemployment was up by nearly half a million, an increase of over 20%.

Faced with panic in the bond markets, this Government rescued the economy from the precipice and slowly began the work of repair. But the reality is that the rescue operation was only the first step. Now we must cure the disease at the root of the UK's illness: our addiction to credit-fuelled growth instead of sustainable trade and competitiveness. The demographic challenge we face is real. Pensions, welfare, the NHS and debt interest are driving the structural deficit and will continue to so. We need, in short, to build a new and more resilient model of growth.

The fiscal crisis we face will only be solved by an increase in productivity. Not on the sand of Government spending but on the rock of innovation. It is what I call an innovation economy. But to do this, we have to deal with the structural inefficiencies in the public sector, getting Whitehall thinking less like a FTSE 100 company and more like a start-up.

We need to adopt the same virtues and disciplines which allow the private sector to generate year-on-year productivity gains: embracing new technology and innovation, rewarding success not failure, and a culture of enterprise. We need to tackle the structural inefficiencies of "one-size-fits-all" big government, Whitehall silos, the stale public good/private bad apartheid which has bedevilled the UK, and let the private and public sectors work together to mutual benefit.

Thanks to the legacy of the last Government, we are borrowing about £3,200 every second. Fiscal loosening is not an option. We must now set our sights on becoming a true Innovation Economy, boldly setting the course for a long-term cycle of sustainable prosperity. Not Labour's plan for higher deficits, more debt and taxes. But innovation-led growth where we trade our way out of debt, by using this fiscal crisis as a chance to embrace a new spirit of entrepreneurship and innovation, across the public and private sectors.

The truth is that in order to prosper in this century we don't just need a government for enterprise, we need a more enterprising government.